Originally published in the September 18 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
A special commission of Brazil’s House of Representatives on September 14 approved the extension through 2011 of the 0.38 percent bank transactions tax (CPMF).
After more than eight hours of debate, the commission voted 13 to 5 to approve the opinion of lawmaker Antonio Palocci recommending the extension. The constitutional amendment project now will be forwarded to the full House of Representatives for debate and a vote in two rounds, the first of which is expected to take place this week. After the second House vote, the project will be reviewed and put to a vote — also in two rounds — in the Senate. The project must be approved by a majority vote of three-fifths in both chambers.
Palocci’s opinion maintains the existing CPMF rate of 0.38 percent, as originally proposed by the executive branch to ensure tax revenue flow of BRL 38 billion (approximately $19 billion) in 2008. Palocci argued that the CPMF is an important tax because everyone pays it. The former finance minister said that in 2006, more than 56 percent of tax evasion cases initiated by the Federal Revenue Department resulted from a cross-check of CPMF information. Palocci acknowledged that the CPMF has one downside — it makes loans more expensive. But he said the executive branch is considering a short-term CPMF exemption or zero rate for loans.
The House of Representatives is expected to approve the proposed CPMF extension. The hurdle is in the Senate, where a battle is expected, particularly after the Senate — in a secret session — found that Senate President Renan Calheiros, who has been accused of accepting bribes to funnel public works contracts to a construction company, did not violate the Senate’s Code of Conduct.
David Roberto R. Soares da Silva